-Capital Goods Sector Sees Nominal Investment up 19% Y/Y
Nominal ind. investment 2001: +9% y/y (revised up from +5% in Oct. fcst)
Nominal mfg. investment 2001: +9% y/y (revised up from +4% in Oct. fcst)
MNI survey median (industry): +5% y/y
MNI survey range (industry): +3% to +8% y/y
Nominal ind. investment 2000: +11% y/y (unchanged)
Nominal mfg. investment 2000: +12% y/y (unchanged)
PARIS (MktNews) - French industry executives have revised up sharply their investment targets for this year, with nominal growth of 9% expected after +5% forecast last October, the national statistics institute Insee said Friday, citing the results of its January sector survey.
While such upward revisions are frequent in the January survey unless the economic outlook erodes sharply, most analysts surveyed had expected no change or even a downward revision due to uncertain demand prospects linked to fallout from the U.S. slowdown.
But in January, when U.S. growth seemed especially doubtful, executives clearly expected overall demand to remain robust, stronger than very squeezed production capacity could handle.
The survey covers some 30% of total business investment, excluding construction and services, where growth prospects are even rosier.
In the manufacturing sector alone, nominal investment is also now expected to grow by 9% this year, compared to +4% forecast in October. An especially promising sign are executives' targets for 19% investment growth in the capital goods sector, up from +12% forecast last fall, which "confirms vigorous demand in this sector," Insee noted.
Investment growth forecasts for the consumer goods sector were revised up to +14% from +7%, for the semi-finished goods sectors to +6% from +2% and for the auto sector to +3% from -3% (after 21% nominal investment growth last year.) By contrast, investment targets for the food industry, where stagnant demand and consumers' health concerns are weighing, were revised down slightly to +10% from +12%. As usual, large industry firms with more than 500 employees foresee the strongest investment growth (+13% after +5% forecast in October). Middle-sized companies foresee 5% investment growth after +7%, while companies with fewer than 100 employees expect 7% growth compared to 4% last October. Executives confirmed their estimates from last October for 2000 nominal investment growth of 11%, with 12% for manufacturing. Last year as well, initial targets were revised up strongly in January and boosted further by year's end.